Bigger and bigger and ...

MIDLAND

April 01, 2012

It was, literally, a sight for sore eyes.

Two years ago March 12, trumpets blasted in Ankeny, Iowa, as America's new gladiators for agricultural justice - U.S. Attorney General Eric Holder, Jr., his antitrust chief Christine Varney, U.S. Department of Agriculture boss Tom Vilsack and hundreds of farmers - gathered for a day-long discussion on competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and cooperation at the federal and state levels.

This first-of-its-kind hearing was the start of a year-long, five-meeting examination into what many farmers and ranchers considered was the growing dysfunction, even out-right manipulation, of agricultural markets.

(T)he central questions is, posed Secretary Vilsack in his opening remarks, are farmers and ranchers in the country currently getting a fair shake? Is the marketplace providing a fair deal to all who are in the farming and ranching business? Is there sufficient transparency?

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OK, the Secretary can't count. But all three questions were, and remain, prescient.

Many farmers and ranchers believe markets for inputs like seed and fertilizer have so few players that competition is non-existent. Livestock producers, especially cattle and poultry growers, have long complained about paper thin, contract-driven slaughter markets dominated by vertically integrated meatpackers.

Two years hence, however, nothing - not one major regulatory or ag antitrust case - has been brought. In fact, there's been more backing up than moving forward. For example:

&middotThe DOJ's avenging antitrust angel, Varney, is long gone and her replacement, Acting Assistant Attorney General Sharis Pozen, in her post since just last August, is on her way out in late April.

&middotUSDA's efforts to strengthen rules and increase market transparency over meatpackers - showcased by its politically-charged, 18-month battle to update the Grain Inspection, Packers and Stockyards Administration - has been a well-documented bust.

&middotAnd, in a show of pure political power, meatpackers and their lackeys, as Iowa Sen. Charles Grassley calls them, have lobbied Congress to drop all livestock market concentration provisions in the rewrite of the 2008 Farm Bill.

It's worse on the political side says ag concentration expert C. Robert Taylor, the Alfa Eminent Scholar and professor of ag economics at Auburn University. In 2010 and 2011, Taylor gave presentations to USDA, DOJ and the Federal Trade Commission on the size and scope of global fertilizer cartels. Each, he recalls, led to lengthy discussions.

But when it came time to talk about what to do, recalls Taylor, most said that if they proceeded to investigate they'd get a phone call from Capitol Hill in 10 minutes telling them their agency's budget was being slashed.

That pressure continues to ensure the big will get bigger. Proof arrived March 20, when Viterra Inc., a $12 billion grain merchandiser that handles 45 percent of all western Canada grain, announced it was selling itself to Glencore International, a $186 billion global giant with grain trading assets from Australia to Argentina to Estonia.

As part of the deal, Viterra will sell its agri-products division to Agrium, Inc., a $15.5 billion-per-year company that labels itself the largest global provider of agricultural crop input products and services.

Reuters news service viewed the Viterra deal as the opening salvo in a second wave of consolidation for new agbiz players like Noble ($57 billion in 2010 sales) and Wilmar International ($44 billion in 2011 sales) to challenge the old ABCD lions - Archer Daniels Midland, Bunge, Cargill and Dreyfus - in world food markets.

Some fight. Three of ABCDs (Dreyfus, a private firm, doesn't reports sales) posted $146 billion in collective revenue last year.

Or about $120 billion more than the entire budget of the U.S. Justice Department.

The Farm and Food File is published weekly in more than 70 newspapers in North America. Contact Alan Guebert at farmandfoodfile.com.